Selling on Amazon and running a successful Amazon business are two different things. One key factor that can set them apart is the use of Amazon 3PL.
Many Amazon sellers find that working with third party logistics can significantly improve their operations.
It has the potential to streamline processes, reduce costs, and allow more time for business growth and strategy.
This guide will provide a comprehensive overview of 3PL, covering:
- The definition and importance of 3PL
- Advantages for Amazon sellers
- Associated costs and potential savings
- How Eva Commerce facilitates 3PL for Amazon businesses
Whether you’re new to Amazon or looking to optimize your existing operations, understanding 3PL can be valuable.
This guide aims to provide the information you need to make informed decisions about incorporating 3PL into your Amazon business strategy.
Table of Contents
- What is Amazon 3PL?
- Where 3PL Fits In?
- Advantages of Using a Amazon 3PL
- How to Choose the Right 3PL Provider
- Comparing Direct FBA vs. Amazon 3PL + FBA: A Cost Analysis
- How Eva Can Help
- Unlock Your eCommerce Potential Today
- Eva: The Future of 3PL in eCommerce
- Case Studies: Successful 3PL Integration
- FAQs
- Wrapping Up
What is Amazon 3PL?
Third-party logistics (3PL) is the outsourcing of logistics processes to external companies. These processes typically include storage, inventory management, and shipping.
While Amazon FBA (Fulfillment by Amazon) is a common 3PL solution for Amazon sellers, numerous other 3PL providers exist, offering various benefits tailored to different business needs.
Using a 3PL company can help businesses streamline their operations, reduce costs, and allow them to focus on core aspects such as product development and marketing.
3PL providers specialize in managing different parts of the supply chain, including:
- Transportation
- Warehousing
- Order processing
Where 3PL Fits In?
3PL providers become involved in the logistics process after products arrive in the destination country and clear customs.
Instead of shipping inventory directly to an Amazon FBA fulfillment center, sellers can opt to route it to a 3PL warehouse. This decision offers several advantages:
Advantages of Using a Amazon 3PL
- Just-In-Time Inventory Management: 3PLs facilitate just-in-time (JIT) inventory strategies, helping reduce holding costs and improve cash flow. This is particularly useful for seasonal products, allowing sellers to store and ship inventory only when needed.
- Risk Mitigation: Using a 3PL provides flexibility in case of listing suspensions or account issues on Amazon. Sellers can quickly redirect inventory to other sales channels if needed. Cost Savings: Some 3PL warehouses offer storage rates up to 50% cheaper than Amazon’s monthly base inventory storage fees, potentially leading to significant savings over time.
- Avoidance of Extra Fees: By using 3PL warehouses, sellers can avoid various Amazon fees such as long-term storage fees, low-level inventory fees, and FBA inbound placement service fees. Simplified Shipments: 3PLs allow sellers to consolidate inventory and ship from a single warehouse, reducing the complexity and costs associated with managing shipments to multiple Amazon fulfillment centers.
- Multi-Channel Fulfillment: 3PLs can fulfill orders from various sales channels, including the seller’s website, other marketplaces, and retail partners, improving efficiency and reducing the risk of overselling. Local Return Management: 3PLs provide a local return address, simplifying the return process for customers and potentially improving customer satisfaction.
How to Choose the Right 3PL Provider
Choosing the right 3PL provider is crucial for your business success. Here are some factors to consider:
- Technology and Automation: Ensure the provider uses advanced technology and automation to streamline operations and improve efficiency.
- Scalability: Choose a provider that can scale with your business as it grows.
- Customer Service: Consider the level of customer service and support offered by the provider.
- Sustainability Practices: Evaluate the provider’s commitment to sustainability and environmentally friendly practices.
Comparing Direct FBA vs. Amazon 3PL + FBA: A Cost Analysis
Let’s examine the costs for selling 3,000 units of a product measuring 6x4x2 inches and weighing 0.85 pounds.
Scenario 1: Direct to Amazon FBA
Initial costs:
- FBA Storage Fee: $0.75 per cubic foot per month
- FBA Fulfillment Fee: $3.22 per unit (small standard-size items 10-16 oz)
Calculation:
- Storage volume: (6 * 4 * 2 * 3000) / 1728 = 83.33 cubic feet
- Monthly storage cost: 83.33 * $0.75 = $62.50
- Fulfillment cost: 3000 * $3.22 = $9,660
Total cost for one month: $62.50 + $9,660 = $9,722.50 Cost per unit: $9,722.50 / 3000 = $3.24
Long-term risk:
- After 365 days, long-term storage fee: 83.33 * $6.90 = $575 per month
Scenario 2: Using 3PL + FBA
3PL costs:
- Storage per Pallet: $40/month
- Palletizing: $15/pallet (if needed)
- Forwarding to FBA: $30 per full pallet
- Local Shipping: Approximately $0.73 per unit
Total 3PL cost: $0.70 to $1.00 per unit
FBA costs after 3PL:
- FBA Fulfillment Fee: $3.22 per unit
Total cost with 3PL: $3.92 to $4.22 per unit
Key Takeaways
1. Short-term costs:
- Direct FBA: $3.24 per unit
- 3PL + FBA: $3.92 to $4.22 per unit
2. Long-term considerations:
- Direct FBA risks additional $575/month in long-term storage fees after a year
- 3PL allows for more flexible storage solutions, avoiding long-term FBA fees
3. Strategic advantages of 3PL:
- Greater inventory control
- Multi-channel fulfillment options
- Risk mitigation against Amazon account issues
How Eva Can Help
Eva Commerce is a leading eCommerce technology company dedicated to helping brands achieve profitable growth on Amazon, Walmart, and other marketplaces.
Our unique AI platform, combined with expert support, enables brands to optimize their advertising strategies and make data-driven decisions.
Eva’s AI platform is the only context-aware advertising solution that integrates inventory levels, conversion rates, and profitability metrics across all marketplaces, not just Amazon.
Our experts analyze this data to determine the best actions for your advertising campaigns, ensuring maximum efficiency and ROI.
Eva Commerce operates top-tier 3PL facilities in Houston, TX, and Carlsbad, CA, with more than 100,000 square feet of space.
Equipped with the latest robotics and staffed by experts with over a decade of experience, these centers are designed to handle your logistics needs with precision and efficiency.
As an Amazon Advanced Partner and Walmart Strategic Solution Partner, Eva also collaborates with industry giants like TikTok, eBay, Shopify, Google, Meta, Wayfair, Faire, and more.
By focusing on profitability, Eva ensures sustainable growth and helps brands invest in the most effective multimedia mix for their marketing efforts.
Ready to take your Amazon business to the next level? Book a free consultation with Eva Commerce.
Unlock Your eCommerce Potential Today
Ready to take your online business to the next level? Try Eva’s powerful AI-driven platform free for 15 days—no credit card needed!
Looking for tailored assistance? If you need specialized support, our agency services and complimentary logistics solutions are designed to propel your brand forward.
Eva: The Future of 3PL in eCommerce
Eva Commerce is at the forefront of these innovations, offering state-of-the-art 3PL services that leverage the latest technology to meet the dynamic needs of modern eCommerce businesses.
Embracing AI and Automation
AI and automation are transforming the logistics industry. By integrating AI-driven solutions, businesses can optimize their supply chain, reduce errors, and improve delivery times.
Eva’s AI platform is designed to enhance these processes, ensuring that your logistics operations are as efficient as possible.
For example, consider a business that sells consumer electronics.
By using AI to predict demand and manage inventory levels, the business can ensure that popular products are always in stock while minimizing overstock of less popular items.
Automation can further streamline the process by handling repetitive tasks like order picking and packing, reducing labor costs and improving accuracy.
Sustainable Logistics Practices
As environmental concerns grow, sustainable logistics practices are becoming increasingly important.
3PL providers are adopting greener practices, such as reducing carbon footprints and using eco-friendly packaging.
Eva Commerce is committed to sustainability and is continuously exploring ways to make logistics more environmentally friendly.
For instance, Eva’s 3PL facilities use energy-efficient lighting and equipment, and the company is exploring the use of electric vehicles for local deliveries.
Additionally, by optimizing shipping routes and consolidating shipments, Eva helps reduce the carbon footprint associated with transportation.
The Role of Data Analytics in Amazon 3PL
Data analytics plays a crucial role in modern logistics. By analyzing data on inventory levels, shipping times, and customer demand, businesses can make more informed decisions and optimize their operations.
Eva’s AI platform leverages data analytics to provide actionable insights that help businesses improve their logistics processes.
For example, by analyzing historical sales data, Eva can predict future demand and adjust inventory levels accordingly.
This helps businesses avoid stockouts and overstock situations, improving customer satisfaction and reducing costs.
Case Studies: Successful 3PL Integration
To illustrate the benefits of 3PL, let’s look at a couple of case studies.
Case Study 1: A Fashion Retailer
A fashion retailer was struggling with high storage costs and inefficient inventory management. By partnering with Eva’s 3PL services, the retailer was able to reduce storage costs by 40% and improve inventory turnover by 30%.
The retailer also benefited from Eva’s multi-channel fulfillment capabilities, which allowed them to streamline their operations and focus on growing their business.
Case Study 2: A Consumer Electronics Brand
Additionally, Eva’s AI-driven demand forecasting helped the brand optimize inventory levels, reducing stockouts and overstock situations.
A consumer electronics brand faced challenges with managing returns and ensuring timely deliveries. By integrating Eva’s 3PL services, the brand was able to establish a local return address, simplifying the returns process and improving customer satisfaction.
FAQs
3PL stands for third-party logistics, which involves using external companies to handle logistics tasks like storing and shipping products.
3PL offers just-in-time inventory management, reduces the risk of stranded inventory, simplifies shipping, and supports multi-channel fulfillment.
Costs include storage fees, palletizing, forwarding to FBA, and local shipping, typically ranging from $0.70 to $1.00 per unit.
Yes, 3PLs support multi-channel fulfillment, allowing you to manage inventory for various sales platforms.
3PLs can provide a local return address, making it easier to handle returns without a physical presence in the market.
A freight forwarder handles international shipping and customs clearance, while a 3PL manages warehousing and local distribution.
Yes, different 3PLs offer various services like product bundling, specialized handling, and multi-channel integration.
Eva’s AI platform integrates inventory levels and other metrics across marketplaces, optimizing your logistics and advertising strategies.
Using a 3PL can be cost-effective by reducing storage fees, improving inventory management, and streamlining logistics processes.
Eva operates 3PL facilities in Houston, TX, and Carlsbad, CA, providing comprehensive logistics support with advanced technology and expert staff.
Wrapping Up
In conclusion, integrating a 3PL into your Amazon business strategy can be a game-changer. It offers flexibility, risk reduction, and cost savings while supporting multi-channel fulfillment.
With the right 3PL partner, you can streamline your operations and focus on scaling your business.
Don’t forget to explore how Eva Commerce can further enhance your eCommerce success with its AI-powered solutions.
For more insights and expert guidance, book a free consultation with Eva Commerce.
The future of 3PL in eCommerce looks promising with advancements in technology, such as AI and robotics, making logistics more efficient and cost-effective.
